STOCKS GO NOWHERE, OIL FALLS: Here's what you need to know

Stocks were mixed, oil fell, and the theme of volatile prices across the investable universe once again played out on the first trading day of a shortened week in New York.

First, the scoreboard:

Dow: 16,016, +27.9, (+0.2%)

S&P 500: 1,881.3, +1, (+0.05%)

Nasdaq: 4,477, -11.5, (-0.2%)

WTI crude oil: $29.60, -2.6%

And now, the top stories on Tuesday:

When traders checked their screens this morning US stock futures were higher, pointing to a bounce back day after another ugly week on Wall Street. But by the end of the day stocks turned negative and oil had collapsed once again. In a report released on Tuesday the International Energy Agency said the world was at risk of "drowning" in oil, which seems a bit extreme. But, you know, not literally drown in oil. Which is impossible and doesn't even make sense. Here's the IEA: "While the pace of stock building eases in the second half of the year as supply from non-OPEC producers falls, unless something changes, the oil market could drown in oversupply. So the answer to our question is an emphatic yes. [The price of oil] could go lower." And as for the real-world impacts low oil prices are having, some of the bad ones include a collapse in home prices in Houston, a centers of the Texas shale boom.

With stocks down about 8% in the first two weeks of the year and now down about 12% from their all-time high, research that rolled in from Wall Street over the weekend seemed to make clear that strategists' phones are ringing off the hook with one simple question coming through the other end of line: "What's going on?" In a weekend note to clients, David Bianco at Deutsche Bank said, "We are not panicked by this correction because we understand it." Bianco added that this lack of fear is driven by a profit recession — which is centered on energy and related impacts — and this has, for Bianco and his team, been a long time coming.

Adam Parker at Morgan Stanley, as is his wont, isn't 100% sure what is going on because Parker isn't really 100% sure about anything. This seems like a constructive posture, all things considered. But so in a note to clients on Tuesday, Parker said the trouble in forecasting the stock market is you've not only got to get the earnings right but then the price that investors will pay for those earnings. The former part of this equation might be easier — but still challenging — to forecast, while knowing where investor appetite is headed in the future is more of a challenge. RBC Capital Market's Jonathan Golub, in contrast, was able to give firmer advice: this is probably a buying opportunity.

On the reliably bearish side of things we had John Hussman out over the weekend writing that the current stretch of month-on-month declines in industrial production — which has happened in 10 of the last 12 months — has never occurred outside of a recession. So maybe this time is different, though of course we use this phrase because it gets the people all worked up. Strictly speaking, it is always different every time, but yes we know that markets are full of strong historical signals investors can ignore at their peril. Hussman has done his part.

There were more bank earnings on Tuesday with Bank of America and Morgan Stanley both reporting profit that beat Wall Street expectations. We've been through this before and Bloomberg's Matt Levine had the definitive take on the topic back in 2014, but the thing to note is that these are banks, large banks, successful banks, banks full of people very good with numbers and on some level it would really be a shock if they couldn't manage to at least exceed what was expected on earnings day. But anyway.

In addition to earnings, however, Morgan Stanley had some news that might be poorly received among staff that cherishes living in a big financial center: the bank wants to deal with its infrastructure costs "head-on," which will see some employees move from the big city to the big exburb for work. Probably.

Hedge fund investor David Einhorn's latest letter to investors came out on Tuesday and, among other things, Einhorn disclosed that he is long shares of Macy's. Einhorn is bullish on the prospects for the retailer to put its real estate assets into a real estate investment trust. The highlight of Einhorn's letter was the piece of brutally honest advice he got from one of his kids who asked: "Dad, why don't you just short your longs and long your shorts?" It's a sensible question considering Einhorn was short shares of Netflix and Amazon in 2015 — the S&P 500's two best-performing stocks — and long shares of CONSOL Energy and Micron Technology, which were both among the benchmark index's 10 worst-performing members. Business Insider's Julia La Roche has all the gory details here.

Tuesday was light on economic data but we did get an update from the National Association of Homebuilders, which reported that its latest homebuilder sentiment reading came in at 60, right around post-recession highs but 1 point below expectations. The reading hit a high of 65 in October but Tuesday's number is still better than the 56 average seen in 2015.

Twitter shares fell 7% on Tuesday to a new record low of $16.68 per share. Twitter was down for a few hours overnight, and while this may or may not be the kind of "news" that moves a stock, there has been nothing but selling pressure on the micro-blogging network for months now.

In its latest big prestige report, Citi looked at what amounts to the decline of the American Empire. "Pax Americana," as the firm writes, is the "post-World War II global order that relied, to a large extent, on American military, economic, and diplomatic power to guarantee relative political stability and economic development." And this is over. What happens next, of course, is the big question and no one really knows the answer. This is the point of the report. But what it seems we do know is that the relative peace and prosperity enjoyed by Western economies and their allies after the Cold War is over. And now we're effectively looking at a power vacuum on the world stage. "Stability in the overall system is weakened and likely to further deteriorate incrementally," the firm writes. "The assessment of political risk in and around Europe, and around the world, needs to be made against this backdrop."

In central banking news, Bank of England governor Mark Carney stole the show after effectively ruling out an interest rate increase anytime soon, perhaps even ruling out a tightening of the BoE's policy stance in 2016 altogether. The BoE was expected to be the next major central bank to follow the US on the road to higher rates. And while they still might be the next to raise rates, Carney made clear this will not be a quick follow.

Azerbaijan, meanwhile, imposed a 20% tax on investors who want to take cash out of the country which has been crushed by the decline in oil prices. Last month Azerbaijan abandoned its peg to the dollar and, as The Financial Times noted, "the dramatic deterioration has sparked half a dozen protests in a country unaccustomed to widespread dissent."